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2. Consider the four-sector economy from Q5 of the Pretutorial Sheet. To remind you, the economy is described by the following equations: Cd=1800+0.6(YT) 1: 900

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2. Consider the four-sector economy from Q5 of the Pretutorial Sheet. To remind you, the economy is described by the following equations: Cd=1800+0.6(YT) 1": 900 T = 100 G = 100 X = 50 Suppose taxation increases by 50 units and government expenditure increases by 50 units at the same time. What happens to the equilibrium level of output? Define the budget surplus as T-G. What happens to the budget surplus

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